Due to the Russian Invasion, Car Prices in Australia are More Expensive Due to the Limited Supply of Computer Chips.

 

Global chip shortage could last until the middle of 2022, foundries say |  AppleInsider

 

The waiting period to get a new car in Australia now exceeds 12 months, due to global supply problems caused by Russia’s invasion of Ukraine which has also raised prices for used and new cars.

 

Australian Automotive Dealers Association Executive Director James Voortman said the waiting period for some popular makes and models of cars was now around 12 months or more.

 

“This is an unprecedented situation,” Voortman said.

 

The general manager of the Toyota dealer in Phillip, Canberra, Amir Hayati said before the pandemic, the waiting period to get a new car was about four months.

 

“But now it has changed to even longer, namely 12 months,” he said.

 

The main reason for the long waiting period for the production of new cars is the scarce availability of semiconductors.

 

Modern cars today require hundreds of these components that work like small computers that connect various parts of the car so that they can function properly.

 

“This is a problem faced by all markets and all car brands in the world,” said Voortman.

 

Last February, Toyota announced it would reduce car production by 150,000 vehicles.

 

General Motors, Ford, Kia, and Opel are other car brands that have announced production cuts as well due to the lack of production of the semiconductor.

 

French carmaker Peugeot has changed the speedometer of their car back to using the old model, instead of using a digital unit due to the unavailability of semi-conductors.

 

“Automakers have had to stop production, or at least reduce capacity because they can’t get the basic materials they need,” said KPMG chief economist Sarah Hunter.

 

Sarah Hunter said the problems started when these car companies reduced demand for semi-conductor supply at the start of the pandemic because they expected demand for car purchases to decline.

 

“Companies that make computer chips are then shifting their production to make chips used in electronics, where the demand for these electronic goods is very high,” he said.

 

“And now the automakers have to queue up with their requests. But so far the production hasn’t met all the demands.”

 

Global car production is declining.

 

The ‘lockdown’ due to COVID-19, port closures, and ship delays are also factors that complicate the world car industry.

 

European car companies appear to be suffering more than Asian manufacturers, with China now reaching pre-pandemic production again, according to data from Datium Insights.

 

Compared to 2019, car production in the United States fell by 41 percent, in Germany it fell by 31 percent and in the UK it also fell, by 36 percent.

 

“We expect European car brands that rely on shipments from Europe to have great difficulty in shipping cars to Australia throughout 2022,” said Tanim Ahmed, Head of Production and Business Data at Datium Insights.

 

German automaker BMW has also cut production at their factories and removed touch screen technology from some of their car models due to the lack of a computer chip.

 

The company also warns that shipping issues will also be disrupted due to Russia’s invasion of Ukraine and expects the chip crisis to continue in 2022.

 

Sarah Hunter from KPMG said Ukraine is a major producer of neon, which is a key component of microchip manufacturing.

 

“Neon is the most important material in making chips. It can’t be replaced with anything else,” he said.

 

“We have seen the impact of the invasion on world oil prices, and also on the commodity market and its supply as well,” he said.

 

“Russia for example is a major producer of copper (copper), but the supply of this item is now disrupted on world markets. So now are challenging times for companies in all sectors and automakers are also getting into it,” he added.

 

Car prices go up.

 

New car prices in Australia have also risen by 25 percent since before the pandemic, according to the pricemycar.com.au website.

 

Meanwhile, data from Datium Insight shows used car prices rose by 50 percent.

 

One of the car dealers in Melbourne, Keith Pulbrook said he had never seen market conditions as they are today.

 

“Prices are non-negotiable now,” he said.

 

It used to be that the longer we own a car, the price will go down more and more but according to Keith Pulbrook, many people are now selling their cars more expensively than when they bought them before.

 

“They bought certain brands before for around Rp. 400 million, now they are selling for Rp. 600 million, it seems strange, but it happened,” he said.

 

One of her clients Amanda Brown has been trying to buy a car for the past few months.

 

“I usually like to buy which was once used as a demo, but now there are no more demo cars available,” he said.

 

“It’s interesting now that car sellers want us to buy a car from the start, for example, look online first. In the past, we lived at the dealer and there were many choices there.”

 

His advice is for those who want to buy a new car is to be patient.

 

“We have to be really patient now,” he said.

 

“Fortunately I don’t have to have a car tomorrow.”

 

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